Disaster Capitalism in Action: financial crisis

More than 50 Million Americans Report Going Hungry

"More than a million children regularly go to bed hungry in the US, according to a government report that shows a startling increase in the number of families struggling to put food on the table.

"President Barack Obama, who pledged to eradicate childhood hunger, has described as "unsettling" the agriculture department survey, which says 50 million people in the US – one in six of the population – were unable to afford to buy sufficient food to stay healthy at some point last year, in large part because of escalating unemployment or poorly paid jobs. That is a rise of more than one-third on the year before and the highest number since the survey began in 1995....

"The report said 6.7 million people were defined as having 'very low food security' because they regularly lacked sufficient to eat. Among them, 96% reported that the food they bought did not last until they had money to buy more. Nearly all said they could not afford to eat balanced meals. Although few reported that this was a permanent situation throughout the year, 88% said it had occurred in three or more months."

U.S. Submits to IMF Scrutiny

"With the news of the Fannie and Freddie bailout still unfolding, former finance ministers from around the world met last week to discuss global economic stability. Some of them had a polite suggestion for the U.S., namely that a little international advice might have helped stave off the crisis....

"It's worth noting that the IMF is the world agency that countries turn to when they're in serious trouble, as Argentina has done during its recent flirtation with the brink. The IMF functions as a kind of global loan shark. Nations get money, but with a lot of strings attached. The IMF also doles out advice. A bunch of experts come to your country and conduct interviews. They look at your books and write a report.

"In practical terms, it's not a big deal. But symbolically, what [Former Finance Minister of India Yashwant] Sinha is suggesting would carry a lot of weight. Sinha says the U.S. has a history of giving advice to other countries about how to run their economies. It hasn't always been so good about listening....

"The U.S. Treasury says America has now agreed to get a stability assessment from the IMF. The announcement didn't get much attention, but officials at the IMF expect to start examining U.S. finances in the next couple months."

Conservatives Start Pushing to Privatize Freddie Mac and Fannie Mae

"If one concludes that the current housing crisis results heavily from laissez-faire ideology trumping common sense protection of safety, soundness, and consumers, then the logical remedy would be to require more effective regulation....

"Yet conservatives are already pushing to 'shrink-the-GSEs,' perhaps as a precursor to fully privatize the secondary market for home mortgages....

"As [Milton] Friedman went on to note about times of crisis, oftentimes 'the politically impossible becomes the politically inevitable.' The housing market plunge appears to be just such a crisis, demanding a progressive consensus be forged soon on the road to follow."

William Greider Proposes Other Measures the Fed Could Have Taken in the Banking Crisis

"We are witnessing a momentous event--the great deflation of Wall Street--and it is far from over. The crash of IndyMac is just the beginning. More banks will fail, so will many more debtors. The crisis has the potential to transform American politics because, first it destroys a generation of ideological bromides about free markets, and, second, because it makes visible the ugly power realities of our deformed democracy. Democrats and Republicans are bipartisan in this crisis because they have colluded all along over thirty years in creating the unregulated financial system and mammoth mega-banks that produced the phony valuations and deceitful assurances. The federal government protects the most powerful interests from the consequences of their plundering. It prescribes "market justice" for everyone else....

"Instead of propping up Fannie Mae or others, the threatened firm should be formally nationalized as a nonprofit federal agency performing valuable services for the housing market. That is the real consequence anyway if the taxpayers have to buy up $300 billion in stock."